BSE shares drop over 9% as NSE revises F&O expiry schedule; declines in 7 of last 8 sessions

Shares of BSE Ltd tumbled over 9 percent in early trade on Wednesday, March 5 on the NSE following the National Stock Exchange (NSE)’s decision to change the expiry day for all Nifty index weekly futures and options (F&O) contracts from the last Thursday of the month to the last Monday of the expiry month, effective April 4, 2025.

"The circular shall come into effect from April 04, 2025 i.e. Expiry day for all existing contracts will be revised to "New Expiry Day" on April 03, 2025 (EOD)," said NSE.

NSE’s F&O Expiry Shift: What’s Changing?

In a circular issued on March 5, NSE confirmed that all existing contracts would be revised to the new expiry day on April 3, 2025 (EOD). The adjustment will impact key indices, including Nifty 50, Bank Nifty, FinNifty, Nifty Next50, and Nifty Midcap Select.

Additionally, weekly contracts for Nifty will now expire on Mondays, while monthly expiries for stocks in the derivatives segment will also shift from the last Thursday to the last Monday of the month.

This move could increase trading activity on Fridays, as market participants might prefer squaring off positions before the weekend rather than carrying them forward. The shift is also seen as NSE’s attempt to reclaim market share in the options segment, where competition with BSE has intensified.

This decision comes soon after Tuhin Kanta Pandey took over as SEBI Chairman, signaling potential regulatory shifts in India's derivatives landscape.

BSE’s Previous Adjustments to Expiry Schedules

The NSE’s latest move follows similar changes introduced by BSE in November 2024, when it revised the monthly expiry dates for Sensex, Bankex, and Sensex50 to the last Tuesday of every month, effective January 1, 2025. Sensex’s weekly contracts now expire on Tuesdays.

Stock Price Trend

Shares of BSE Ltd tumbled as much as 9.3 percent to an intraday low of ₹4,035.10 on March 5, extending its recent losing streak. The stock has been in the red for seven of the past eight sessions, despite a brief 2 percent gain in the previous session. Before that, it had suffered six consecutive declines.

Despite the recent correction, BSE shares have surged 92 percent over the past year. However, the stock has now corrected 34 percent from its all-time high of ₹6,133.40, recorded on January 20, 2025. The downward trend has continued in March, with the stock losing nearly 10 percent in just three sessions, following a 12.6 percent drop in February and a 0.37 percent decline in January.

Legal Concerns Add Pressure

The sharp decline followed a Mumbai court’s directive to register a First Information Report (FIR) against former SEBI Chairperson Madhabi Puri Buch, two BSE officials, and others. The case pertains to alleged irregularities in granting listing permissions to a company back in 1994.

The FIR was based on an application seeking an investigation into alleged listing violations related to Cals Refineries Ltd. However, BSE has strongly denied any wrongdoing, arguing that the officials named in the case were not in their respective roles at the time of the listing and had no involvement with the company. The exchange described the allegations as "frivolous and vexatious", emphasizing that the court’s directive came without prior notice or an opportunity for BSE to present its case. It also confirmed that necessary legal steps are being taken to challenge the order.

Brokerage Concerns and SEBI's Regulatory Changes

Further weighing on sentiment, Goldman Sachs slashed its target price for BSE shares from ₹5,650 to ₹4,880, citing uncertainties surrounding SEBI’s proposed regulatory changes. The global brokerage firm maintained a ‘neutral’ rating, cautioning that trading volumes could be at risk.

Goldman Sachs highlighted that proprietary traders account for nearly 70 percent of BSE’s average daily turnover, and their activity may be affected by SEBI’s regulatory proposals. On February 24, SEBI released a consultation paper suggesting a shift in the calculation of open interest (OI) in equity derivatives. The new framework proposes moving from the current notional terms to a future-equivalent or delta-based methodology, aimed at curbing market manipulation and aligning derivatives risk with cash market liquidity.

Revised Forecasts and Market Outlook

Amid the regulatory changes, HDFC Securities revised its projections for BSE, cutting its notional turnover estimates by 40 percent for FY26E, while raising premium realization estimates by 70 percent. As a result, the brokerage increased its revenue forecast by 2 percent and expects BSE’s EBITDA margin to expand from 53 percent to 63 percent in FY26E, leading to an 18 percent increase in EPS estimates.

Meanwhile, Motilal Oswal Financial Services pointed out that BSE’s regulatory costs paid to SEBI, along with clearing and settlement expenses paid to NSE, remain linked to notional turnover or contract volume. This means that any adjustments to SEBI’s policies could have a direct impact on BSE’s financial performance.

Outlook: Increased Volatility Ahead?

Market participants will closely watch how traders adapt to these changes and whether the shift in expiry schedules alters liquidity patterns across exchanges. While NSE’s move is aimed at regaining control over F&O trading volumes, BSE’s response in the coming months will be crucial in determining its positioning in the derivatives segment.

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